Slides of Product and process design

1. Designing Operations

2. Organizations exist to provide goods or services to society
Great products are the key to success
Top organizations typically focus on core products
Customers buy satisfaction, not just a physical good or
particular service
Fundamental to an organization's strategy with implications
throughout the operations function
Goods and Services Selection

3. Goods or services are the basis for an organization's
existence
Limited and predicable life cycles requires constantly
looking for, designing, and developing new products
New products generate substantial revenue
Goods and Services Selection

4. Generating New Products
1. Understanding the customer
2. Economic change
3. Sociological and demographic change
4. Technological change
5. Political and legal change
6. Market practice, professional standards,
suppliers, distributors
New Product Opportunities

5. Product Life Cycles
May be any length from a few days to
decades
The operations function must be able to
introduce new products successfully

6. Product Life Cycle
Negative
cash flow
Introduction Growth Maturity Decline
Sales,cost,andcashflow
Cost of development and production
Cash
flow
Net revenue (profit)
Sales revenue
Loss

7. Differences between Different Stages of Product Life Cycle
Steps Startup Growth Maturity Decline
Product
Variety
Higher
Varieties
Increasing
standardization
Emergence of
dominant
design
High
standardization
with
‘commodity’
characteristic
Volume Low volume Increasing
volume
High volume High volume
(Often
Reducing)
Industry
structure
Small
competitors
Fall out and
consolidation
Few large
companies
Survivors
Form of
Competition
Product
varieties
Product quality
and availability
Dependability
and price
Price

8. Product Development Process
Need
Identification
Feasibility
Study
Advance
Design
Product
Development
and
Engineering
Process
Design and
Development
Product
Evaluation
and
Improvement
Product Use
and Support

9. Issues for Product Design
Robust design
Modular design
Computer-aided design (CAD)
Computer-aided manufacturing (CAM)
Virtual reality technology
Value analysis
Sustainability and Life Cycle Assessment (LCA)

10. Robust Design
Robust product: A product that can perform under a
wide range of environmental conditions without
failing.
Product is designed so that small variations in
production or assembly do not adversely affect the
product
Typically results in lower cost and higher quality

11. Modular Design
Modular design: The creation of products from some
combination of basic, pre-existing subsystems
(components).
Products designed in easily segmented components
Adds flexibility to both production and marketing
Improved ability to satisfy customer requirements

12. Using computers to design
products and prepare
engineering documentation
Shorter development
cycles, improved accuracy,
lower cost
Information and designs can
be deployed worldwide
Computer Aided Design (CAD)

13. Computer-Aided Manufacturing
(CAM)
Computer-aided manufacturing (CAM): Manufacturing
systems utilizing computer software programs that control
the actual machine on the shop floor.
Utilizing specialized computers and program to control
manufacturing equipment
Often driven by the CAD system (CAD/CAM)

14. Product quality
Shorter design time
Production cost reductions
Database availability
New range of capabilities
Benefits of CAD/CAM

15. Virtual Reality Technology
Computer technology used to develop an
interactive, 3-D model of a product from the basic
CAD data
Allows people to ‘see’ the finished design before a
physical model is built
Very effective in large-scale designs such as plant
layout

16. Value Analysis
Focuses on design improvement during
production
Seeks improvements leading either to a better
product or a product which can be produced
more economically with less environmental
impact

17. Sustainability and Life Cycle
Assessment (LCA)
Sustainability means meeting the needs of the
present without compromising the ability of
future generations to meet their needs
LCA is a formal evaluation of the environmental
impact of a product

18. 7-18
Four Process Strategies
Four process strategies
 1. Process focused.
 2. Product focused.
 3. Repetitive focused.
 4. Mass customization.
Several strategies may be used within one facility.
Process strategies follow a continuum.

19. Fit of Process, Volume, and Variety
PROCESS FOCUS
(job shops)
REPETITIVE FOCUS
(autos, motorcycles)
PRODUCT FOCUS
(steel, chemicals)
High Variety
(allows customization)
Low Variety
(standardization)
MASS
CUSTOMIZATION
(Dell Computer)
POOR STRATEGY
Low Volume High Volume

20. 1. Process Focus
Facilities organized by process.
 Similar processes or equipment grouped
together. (Example: All drill presses are together.)
Low volume, high variety products.
 75% of all global products.
Products follow many different paths.
Other names:
 Intermittent process.
 Job shop.
1
3 4
2

21. Process Focus Examples
Bank
Machine
Shop
Hospital

22. Process Focus - Pros & Cons
• Advantages:
• Greater product flexibility.
• More general purpose equipment.
• Lower initial capital investment.
• Disadvantages:
• High variable cost per unit.
• More highly trained personnel.
• More difficult production planning & control.
• Low equipment utilization (5% to 25%).

23. 2. Product Focus
Facilities organized by product.
High volume, low variety products.
Long, continuous production runs.
 Discrete unit manufacturing.
 Continuous process manufacturing.
Other names:
 Line flow production.
 Continuous production.
1 2 3 4

24. Product Focus Examples
Light Bulbs
(Discrete)
Paper
(Continuous)
.
Soft Drinks
(Continuous,
then Discrete)

25. Product Focus - Pros & Cons
• Advantages:
• Lower variable cost per unit.
• Lower but more specialized labor skills.
• Easier production planning and control.
• Higher equipment utilization (70% to 90%).
• Disadvantages:
• Lower product flexibility.
• More specialized equipment.
• Higher capital investment.

26. 3. Repetitive Focus
• Facilities often organized by assembly lines.
• Characterized by modules.
• Parts & assemblies made previously.
• Modules combined for many output options.
• Other names:
• Assembly line.
• Production line.

27. Repetitive Focus - Examples
Truck
Clothes
Dryer
Fast
Food
McDonald’s
over 95 billion served

28. Repetitive Focus - Considerations
More structured than process focus, less
structured than product focus.
Enables quasi-customization.
Has advantages and disadvantages of process
focus and product focus.

29. 7-29
Process Continuum
Process Focused
(intermittent process)
Repetitive
Focus
(assembly line)
Product Focused
(continuous
process)
Continuum
High variety, low volume
Low utilization (5% - 25%)
General-purpose equipment
Low variety, high volume
High utilization (70% - 90%)
Specialized equipment
Modular
Flexible
equipment

30. 4. Mass Customization
Rapid, low-cost production to fulfill unique customer
desires.
Distinctions between process, repetitive and product focus
blur, making variety and volume issues less significant.
Very hard to achieve!

31. Mass Customization at Dell Computer
Company
• Sells custom-built PCs directly to consumer.
• Builds computers rapidly, at low cost, and only when
ordered.
• Integrates the Web into every aspect of business.
• Operates with six days inventory.
• Research focus on software to make installation and
configuration of PCs fast and simple.

32. 7-32
Process Analysis and Design
• Process should:
• Be designed to achieve competitive
advantage - differentiation, response, or low
cost.
• Eliminate steps that do not add value.
• Maximize customer value, as perceived by the
customer.

33. Process Design Analysis
The analysis stage of process design involves
calculating the details of the process, in particular
• its objectives,
• sequence of activities,
• allocation of tasks and capacity, and
• its ability to incorporate the effects of variability.
It is the complementary activity to the broad
positioning of processes

34. The design factors that will influence the flow objectives
• The variability of input arrival to the process
• The configuration of the resources and activities
within the process.
• The capacity of the resources at each point in the
process.
• The variability of the activities with in the process.

35. Types of Processes
According to different positions on the volume–variety spectrum.
Manufacturing Process Types (Manufacturing Process
Technology)
1.Project Processes
2.Jobbing Processes
3.Batch Processes
4.Mass processes
5.Continuous process
Service Process types (Service Process Technology)
1.Professional service
2.Service shop
3.Mass service

36. Manufacturing Process Types

37. Project Processes
One-off, complex, large scale, high work content
“products”
Specially made, every one customized
Defined start and finish: time, quality and cost
objectives
Many different skills have to be coordinated
Fixed position layout

39. Jobbing Processes
Very small quantities: “one-offs”, or only a few required
Specially made. High variety, low repetition.
Skill requirements are usually very broad
Skilled jobber, or team of jobbers complete whole product
Fixed position or process layout (routing decided by jobbers)

41. Batch Processes
Higher volumes and lower variety than for jobbing
Standard products, repeating demand.
Specialized, narrower skills
Set-ups (changeovers) at each stage of production

43. Mass processes(Assembly line process)
Higher volumes than Batch
Standard, repeat products
Low and/or narrow skills
No set-ups, or almost instantaneous ones

45. Continuous processes
Extremely high volumes and low variety: often single
product
Standard, repeat products
Highly capital-intensive and automated
Few changeovers required
Difficult and expensive to start and stop the process
Product layout: usually flow along conveyors or pipes

47. (Service Process Technology)

48. Service Process Types

49. Professional Services
High contact with customers in the service process.
High levels of customization
More staff time is spent in servicing customers.
Professional services tend to be people-based and
process (how the service is delivered).
Examples: management consultants, lawyers’
practices, architects, doctors’ surgeries, auditors etc.

50. Service Shop
Service shops are characterized by levels of customer
contact, customization, volumes of customers and
staff discretion.
Service is provided via mixes of front- and back-office
activities.
Examples: banks, high street shops, holiday tour
operators, car rental companies, schools, most
restaurants, hotels and travel agents.

51. Mass Services
Mass services have many customer transactions.
Equipment based and ‘product’-oriented,
• with most value added in the back office
• relatively little judgement applied by front-office staff.
Closely defined division of labour and to follow set procedures.
Examples: Supermarkets, a national rail network, an airport,
telecommunications services, libraries, television stations, the police
service and the enquiry desk at a utility.

52. The product–process matrix
Important elements of process design are strongly
related to the volume–variety position of the process.
In any process, the tasks that it undertakes, the flow of
items through the process, the layout of its resources,
the technology it uses, and the design of jobs, are all
strongly influenced by its volume–variety position.

53. Product Process Matrix

54. Product Process Matrix (including service)

55. Moving off the natural diagonal
A process lying on the natural diagonal of the matrix will
normally have lower operating costs than one with the
same volume–variety position that lies off the diagonal.
Diagonal represents the most appropriate process
design for any volume–variety.

56. Capacity Planning

58. What is Capacity?
The maximum output of a system/organization in a
given period.
The throughput, or the number of units a facility can
hold, receive, store, or produce in a period of time.
Over and Under capacity are horrible.

59. Types of Capacity
Design Capacity
• The maximum capacity that can be achieved under ideal conditions.
Effective Capacity
• The expected capacity given the current operating environment and constraints
like
• Setups to replace the raw material
• Adjustments, oiling, clearing
• Quality tests may cause loss of units
Actual Capacity
• The maximum output rate which is actually achieved under the constraints of
machine breakdown, labour inefficiencies and absenteeism, late delivery of
materials.

60. Design Capacity > Effective Capacity >= Actual Capacity

61. Calculations Formulae
• Utilization =
𝐴𝑐𝑡𝑢𝑎𝑙 𝑂𝑢𝑡𝑝𝑢𝑡
𝐷𝑒𝑠𝑖𝑔𝑛 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦
* 100
• Efficiency =
𝐴𝑐𝑡𝑢𝑎𝑙 𝑂𝑢𝑡𝑝𝑢𝑡
𝐸𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦
∗ 100

62. Determinants of Effective Capacity
Facilities
• Design
• Location
• Layout
• Environment
Process
• Quantity capabilities
• Quality capabilities
Product/service
• Design
• Product or service mix
Operational Policy
• Scheduling
• Materials management
• Quality assurance
• Maintenance policies

63. Human Factors
• Job content
• Job design
• Training and experience
• Motivation
• Compensation
• Learning rates
• Absenteeism and turnover
Supply Chain and External
Factors
• Product standards
• Safety regulations, unions
• Pollution control standards

64. Capacity Planning Process
Assessing Existing Capacity
Forecasting Capacity Needs
Identifying Alternatives to Modify Capacity
Evaluating Financial, Economical and
Technical Aspects of Capacity Alternatives
Selection of Alternatives

65. 1. Assessing Existing Capacity
Measure the existing capacity of the firm
Different organizations have different measures of capacity
Organization Capacity measures Basis
Steel Company Tonnes of steel Output
Hospital No. of beds Input
School No. of students
enrollment
Input
Auto plant No. of cars Output

66. 2. Forecasting Capacity Needs
Short term capacity needs
• Up to 1 year
Long term capacity needs
• More than 1 year

67. 3. Identifying Alternatives to Modify Capacity
Short Term Capacity Modification
• In capital intensive system- higher or lesser machine hours, maintaining
facilities, etc.
• In labour intensive system- overtime working, laying of employees,
immediate hiring.
Long Term Capacity Modification
• For long term capacity needs
• Capacity modification option
• Expansion- establishing new facilities
• Contraction- selling existing facilities, firing employees
• Permanent shut down

68. 4. Evaluating Financial, Economical and Technical
Aspects of Capacity Alternatives
Which capacity alternative is financially, economically
and technically suitable
Some techniques- NPV analysis, time value of
investment, BEP analysis, etc.

69. 5. Selection of Alternative
On the basis of need, vision of future
business and suitability best alternative has
to be selected.

70. Methods of Minimizing Non-sampling Errors
• Checking the sampling process
• Preparation of questionnaire
• Pilot survey
• Fix procedures
• Use of competent manpower
• Provide information
• Provide training
• Use of experts
• Checking data processing and analysis